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on Contract Theory and Applications |
| By: | Omar El Euch; Thibaut Mastrolia; Mathieu Rosenbaum; Nizar Touzi |
| Abstract: | We consider an exchange who wishes to set suitable make-take fees to attract liquidity on its platform. Using a principal-agent approach, we are able to describe in quasi-explicit form the optimal contract to propose to a market maker. This contract depends essentially on the market maker inventory trajectory and on the volatility of the asset. We also provide the optimal quotes that should be displayed by the market maker. The simplicity of our formulas allows us to analyze in details the effects of optimal contracting with an exchange, compared to a situation without contract. We show in particular that it leads to higher quality liquidity and lower trading costs for investors. |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1805.02741&r=cta |
| By: | Seungjin Han |
| Abstract: | This paper proposes a tractable competing mechanism game where each seller simultaneously posts a trading contract that specifies a menu of dominant strategy incentive compatible (DIC) direct mechanisms conditional on an array of messages sent by buyers, and each seller subsequently chooses a DIC direct mechanism from his menu. The complete set of a seller's profits that are supportable in a (symmetric) equilibrium is the interval between the minmax value of his profit with respect to DIC direct mechanisms and his profit in the joint profit maximization. The set of a seller's equilibrium profits is robust to the possibility of a seller's deviation to any arbitrary mechanism in the standard environment with linear utilities and independent private type. Further, with no limited liability or with no capacity constraints, the set of a seller's equilibrium profits coincides with the set of his feasible (i.e., individually rational and incentive compatible) profits. Given a number of buyers, the number of sellers can be endogenized and is equal to the largest number at which a seller's profit in the joint profit maximization is non-negative: As the number of buyers increases, competition is neutralized because only the monopoly terms of trade prevails in the market, whereas the range of a seller's equilibrium profits shrinks to his reservation profit. |
| Keywords: | competing mechanisms, dominant strategy incentive compatible direct mechanisms, robust equilibrium allocations, market information |
| JEL: | C72 D82 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2018-11&r=cta |
| By: | Amanda Agan; Matthew Freedman; Emily Owens |
| Abstract: | Governments in the U.S. must offer free legal services to low-income people accused of crimes. These services are frequently provided by assigned counsel, who handle cases for indigent defendants on a contract basis. Court-assigned attorneys generally garner worse case outcomes than privately retained attorneys. Using detailed court records from one large jurisdiction in Texas, we find that the disparities in outcomes are primarily attributable to case characteristics and within-attorney differences across cases in which they are assigned versus retained. The selection of low-quality lawyers into assigned counsel and endogenous matching in the private market contribute less to the disparities. |
| JEL: | H44 H76 J15 J38 K14 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24579&r=cta |
| By: | Francesco Devicienti (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Davide Vannoni (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy) |
| Abstract: | This paper investigates the full-time/part-time wage gap by using matched employer-employee data on the entire population of workers and firms in Italy over a 32-year period. Relying on regression models that control for worker, firm, and match fixed effects, we find that part-time work attracts a wage premium compared to full-time work. This finding, coupled with the detrimental effect of part-time work on productivity documented by Devicienti et al. (2018), explains why firms are often unwilling to concede part-time positions to employees asking for them. |
| Keywords: | Part-time/full-time wage gap, matched employer-employee panel data, multiple fixed effects regressions. |
| JEL: | J31 J22 J53 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpapnw:052&r=cta |